Google Highlights Nielsen Earnings Call

Reporting its first full-year results as a privately held company, Nielsen Co. Monday said its revenues rose 5% to $4.174 billion, largely on the continuing growth of its media measurement businesses in the United States. But like many sectors of the media business in early 2007, Nielsen executives indicated one of their greatest concerns was not the advent of new media technologies, the shifting digital ground of the television marketplace, or even potential competition from other traditional research suppliers. Nielsen's big new concern is Google.

"People want to get into this space because it's big. Television advertising is about $70 billion - many times bigger than Internet. So you can understand, at least, Google's motivation in their case," Nielsen CFO Brian West said Monday during a conference call with analysts to discuss Nielsen's 2006 results and 2007 outlook.

West, a long-time GE executive who was named head of Nielsen's financial operations in February, was referring to speculation surrounding Google's recent agreement with direct satellite TV operator EchoStar, which as sparked speculation that the online search company might be extending its tentacles into the field of TV audience measurement. But the fact that West singled out Google - a relative newcomer to the TV business - while ignoring companies known to be developing digital set-top measurement plans like TNS and TiVo, says a lot about the pervasive influence Google is having on the overall media business.



West implied that Nielsen still is unclear about Google's motives in TV audience measurement, and that, "at least initially," its focus would be on "how many raw hits an advertiser gets with EchoStar on their digital set-top box." While Google has not disclosed what its plans were for working with EchoStar's data, the company's Web site says its "mission is to organize the world's information and make it universally accessible and useful." That's as mission that could well be put on the new Nielsen Co.'s Web site, as well, given the company's focus on its so-called A2/M2 initiative, whose goal is to measure media usage "anywhere and anytime" it occurs.

West implied that Nielsen's leverage was its existing national TV audience samples and its ability to measure the "demographic" composition of media audiences.

"People are trying to get into this space, but you know as well as anyone that the industry said long ago that demographic information is what's important and critical to making a decision," he said. "We think that's where Nielsen and our sample is going to be a critical component of TV measurement."

That said, West implied that Nielsen might also work directly with companies like EchoStar or even Google to develop new audience measurement services.

He noted that Nielsen already is working with DirecTV as part of its new Nielsen DigitalPlus service to "understand how their customers utilize interactive television."

"We're being responsive to our client base. We're trying to keep a good, firm understanding of the competitive situation out there, but the particular one that got a lot of write-up was Google/EchoStar. It may gain traction, or it or it may be isolated. We don't know. I don't think anyone else knows at this point."

One thing Nielsen executives know is that media audience measurement is their highest growth sector. While overall company revenues rose just 5% during 2006, its media measurement businesses jumped 9%, while its Internet measurement business NetRatings was up 17%. By comparison, Nielsen's marketing research business rose just 4.5%, and its business media sector - trade magazines like Adweek, Billboard and The Hollywood Reporter - were down 2% due to "softness" in advertising sales.

During the analysts' call, Rob Ruijter, a member of Nielsen's executive board, implied the company might further restructure its operations, with a goal of incorporating NetRatings into its broader "portfolio" and possibly even realigning its marketing and media assets around "media and consumer" labels to better reflect its businesses.

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